Sanofi / Bioverativ overview
Bioverativ (BIVV):
• Spun off Biogen in 2017. Only pure player in the hemophilia drug market
• Had sales of $847M + $41M in royalties in 2016, guided to grow 30% in 2017
• 39% EBITDA margin in 2016 (43.4% estimated EBITDA margin for 2017)
• Pipeline of drugs targets every modality in hemophilia and other blood diseases
• The drugs are currently sold in the US, Canada, Japan and Australia
Deal terms:
• Deal financed by cash on hand and debt (credit expected to remain unchanged)
• Transaction expected to close in next 3 months, approved by both Boards
• Accretive immediately, up to 5% accretive in 2019
• Deal ROIC to exceed cost of capital within 3 years
• Doesn’t look as expensive if you assume $200M in costs savings in 2019
Strategic rationale:
• Gain a leadership position in the hemophilia market ($10B globally, growing 7%/year) with two already developed and marketed products
• Leverage Sanofi’s existing commercial platform to distribute Bioverativ products internationally
• Fits within Sanofi’s rare disease platform
Risks – why is the stock down on the news?
• Potential pressure from competitors in hemophilia, which could dampen long term growth trajectory
• Purchase price too high if growth of the target company was assessed too high